Overtaxed Illinoisans also seeing nation's smallest growth in personal income

Illinois’ average personal income growth since the Great Recession is tied with Nevada for the worst in the country, according to data from the Pew Charitable Trusts recently published on the Illinois Policy Institute website.

Michael Lucci, the institute's vice president of policy, argued that the 0.8 percent average growth over nine years is a sobering figure that shines new negative light on plans to increase the state’s taxes.

“This economic data might come as a surprise to anyone paying attention to the tax debate in Illinois, where state and local taxing authorities have treated Illinois taxpayers like a bottomless well of new revenue,” Lucci wrote.

As a comparison, Lucci pointed to Indiana, where personal income growth was 1.6 percent, and the national average, which was 1.7 percent.

From the end of the recession in 2007 to the end of 2016, Illinois and Nevada have achieved the same abysmal personal income growth rates, but Nevada managed to turn those figures around last year, achieving a growth rate of 4.5 percent, while Illinois improved by just 0.2 percent. Other low-performing states with poor nine-year averages, like Maine and Connecticut, have also managed better growth in the past year than Illinois, hitting 1.4 and 1.3 percent, respectively.

In a Democratic budget plan passed by the Senate, lllinois' personal income tax rate would climb to 4.95 percent from 3.75, which Lucci said amounts to an average household increase of $1,125 a year. The corporate income tax rate would also increase and the state sales tax would expand to cover a range of services that were previously untaxed.

“But the taxpayer well is drying up,” Lucci wrote. “Illinoisans are struggling with weak income growth more than any other state population in the country. Rather than looking to take still more money from taxpayers, political leaders should be working to prevent further tax increases from swallowing up more of Illinoisans’ weak income growth.”

In recent years, Illinois has lost more residents to out-migration than any other state, which Lucci blames on taxes. A poll by the Paul Simon Public Policy Institute revealed that working-age Illinoisans want to leave the state and cite taxes as their main motivation.

The institute recently commissioned a poll of its own and found that 64 percent of Illinoisans oppose raising the state income tax, 76 percent oppose raising the state sales tax, and 51 percent oppose raising the state income tax even if a property tax freeze were put in place.

When asked how the state should balance its budget, 49 percent responded that Illinois should eliminate its deficit purely through spending cuts, while 38 percent supported spending cuts and tax increases.